Construction in favor of labor

Labor Code Art. 4; Civil Code Art. 1702

HOCHENG PHILIPPINES CORPORATION v. ANTONIO M. FARRALES

G.R. No. 211497, March 18, 2015

REYES, J.:

FACTS:

Farrales was hired by HPC on May 12, 1998 as Production Operator, promoted as Leadman
then Acting Assistant Unit Chief, and Assistant Unit Chief of Production, with a monthly salary of
P17,600.00. A report reached HPC management that a motorcycle helmet of an employee, Reymar
Solas, was stolen at the parking lot within its premises. Security Officer Francisco Paragas III
confirmed a video sequence recorded on closed-circuit television (CCTV) around 3:00 p.m. showing
Farrales taking the missing helmet from a parked motorcycle.

Later that day, HPC sent Farrales a notice to explain his involvement in the alleged theft. The
investigation was supported by the employees’ union, ULO-Hocheng. Below is Farrales’ explanation,
as summarized by the CA: Farrales borrowed a helmet from his co-worker Eric Libutan since they
reside in the same barangay. They agreed that Eric could get it at the house of Farrales or the latter
could return it the next time that they will see each other. Eric told him that his motorcycle was black
in color. As there were many motorcycles with helmets, he asked another employee, Andy Lopega
who was in the parking area where he could find Eric’s helmet. Andy handed over to him the
supposed helmet which he believed to be owned by Eric, then he went home.

On November 28, 2009, at around 6 o’clock in the morning, he saw Eric at their barangay and
told him to get the helmet. But Eric was in a rush to go to work, he did not bother to get it. In the
morning, upon seeing Eric in the workplace, Farrales asked him why he did not get the helmet from
his house. Eric told him that, “Hindi po sa akin yung nakuha nyong helmet.” Farrales was shocked
and he immediately phoned the HPC’s guard to report the situation that he mistook the helmet which
he thought belonged to Eric. After several employees were asked as to the ownership of the helmet,
he finally found the owner thereof, which is Jun Reyes’s (“Jun”) nephew, Reymar, who was with him.
Farrales promptly apologized to Jun and undertook to return the helmet the following day and
explained that it was an honest mistake.

Farrales did not know yet that HPC will send a letter demanding him to explain. A hearing was
held, present were Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda, a
witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the time
of the alleged incident, he was already seated on his motorcycle and about to leave the company
compound when Farrales approached and asked him to hand to him a yellow helmet hanging from a
motorcycle parked next to him. When Andy hesitated, Farrales explained that he owned it, and so
Andy complied. But Eric had specifically told Farrales that his helmet was colored red and black and
his motorcycle was a black Honda XRM-125 with plate number 8746-DI, parked near the perimeter
fence away from the walkway to the pedestrian gate. The CCTV showed Farrales instructing Andy to
fetch a yellow helmet from a blue Rossi 110 motorcycle with plate number 3653-DN parked in the
middle of the parking lot, opposite the location given by Eric. Farrales in his defense claimed he could
no longer remember the details of what transpired that time, nor could he explain why he missed
Eric’s specific directions.

HPC issued a Notice of Termination to Farrales dismissing him for violation of Article 69, Class
A, Item No. 29 of the HPC Code of Discipline, which provides that “stealing from the company, its
employees and officials, or from its contractors, visitors or clients,” is akin to  serious misconduct and
fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative, which are just causes for termination of employment under Article 282 of the Labor
Code. Farrales filed a complaint for illegal dismissal, non-payment of appraisal and mid-year
bonuses, service incentive leave pay and 13th month pay. He also prayed for reinstatement, or in lieu
thereof, separation pay with full backwages, plus moral and exemplary damages and attorney’s fees.
During the mandatory conference, HPC paid Farrales P10,914.51, representing his 13th month pay
for the period of January to February 2010 and vacation leave/sick leave conversion. Farrales agreed
to waive his claim for incentive bonus. LA ruled in favor of Farrales, the fallo of which all the
respondents Hocheng Phils. Corporation, Inc. Sam Cheng and Judy Geregale are found guilty of
illegal dismissal and ordered jointly and severally to pay complainant. CA the appellate court agreed
with the LA that Farrales’ act of taking Reymar’s helmet did not amount to theft, holding that HPC
failed to prove that Farrales’ conduct was induced by a perverse and wrongful intent to gain, in light of
the admission of Eric that he did let Farrales borrow one of his two helmets, only that Farrales
mistook Reymar’s helmet as the one belonging to him.

ISSUE:
Whether or not Farrales’ dismissal from employment was valid.

HELD:

No. To validly dismiss an employee, the law requires the employer to prove the existence of
any of the valid or authorized causes, which, as enumerated in Article 282 of the Labor Code, are: (a)
serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the
latter’s representative in connection with his work; (b) gross and habitual neglect by the employee of
his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or
his duly authorized representative; (d) commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized representative;
and (e) other causes analogous to the foregoing. As a supervisorial employee, Farrales is admittedly
subject to stricter rules of trust and confidence, and thus pursuant to its management prerogative
HPC enjoys a wider latitude of discretion to assess his continuing trustworthiness, than if he were an
ordinary rank-and-file employee. HPC therefore insists that only substantial proof of Farrales’ guilt for
theft is needed to establish the just causes to dismiss him, as the NLRC lengthily asserted in its
decision. Nonetheless, the Court agrees with the CA’s dismissal of the award of moral and exemplary
damages for lack of merit. There is no satisfactory proof that the concerned officers of HPC acted in
bad faith or with malice in terminating Farrales. Notwithstanding the LA’s assertion to this effect,
Farrales’ bare allegations of bad faith deserve no credence, and neither is the mere fact that he was
illegally dismissed sufficient to prove bad faith on the part of HPC’s officers. 38 But concerning the
award of attorney’s fees, Farrales was dismissed for a flimsy charge, and he was compelled to litigate
to secure what is due him which HPC unjustifiably withheld.